Report: Majority of Companies Misidentify High Potentials

Arlington, Va. — March 24

Member-based advisory company CEB reported recently that more than two-thirds of companies are misidentifying their high-potential employees, jeopardizing long-term corporate performance. This failure drives true HiPos — those who demonstrate the attributes to be successful future leaders — to pursue positions with potentially competitive organizations willing to invest in their development. To keep top talent in house and maximize bottom-line results, companies must re-evaluate and reinvigorate their HiPo programs.

Major corporations spend an average of $3 million every year on leadership and development programs for HiPo employees, but 55 percent of these employees will turn over in a five-year period, resulting in wasted dollars and an insufficient leadership bench. The inability to establish a strong, diverse leadership pipeline impairs bottom-line performance since organizations with weak leadership generate roughly half the revenue and profit growth as those with strong leadership.

Companies can expect to improve the success of their programs more than 10-fold by correctly identifying HiPos and engaging them with the right training and development. Not only are they well-positioned to groom employees for senior leadership positions, but they will also strengthen talent pipelines and reduce flight risk for the business longer-term.

Companies can improve the caliber of leaders and create incentives for HiPos to stay by applying a four-pronged approach:
• Redefine “potential.” Adopt a clearer definition that accounts for the key attributes employees need to have to rise to more senior roles: the desire to assume senior positions (aspiration), manage and lead others effectively (ability), as well as having the commitment to realize their career goals with their current employer (engagement).
• Measure potential objectively. Rather than relying solely on subjective manager nominations or evaluation, organizations should adopt a systematic process for identifying HiPo talent through objective talent assessment and evaluation.
• Ask for commitment in return for career opportunities. Proactively evaluate engagement and act to mitigate flight risk among HiPo employees by evaluating their engagement today and their longer-term commitment to the organization in the future.
• Create differentiated development experiences. Typical HiPo programs provide opportunities for incremental skill building but fail to prepare HiPo employees for realistic future roles. The best organizations help HiPos learn new skills, but also apply existing skills in different roles by exposing them to high-impact development experiences.

Source: CEB